Last year turbotax was unable to e-file if safe harbor was selected. (I used safe harbor for one small rental deduction.) Last year the USPS was delayed a month, and the IRS took their time. This year, the IRS has warned that (at least) paper filings will be delayed. I am unable to determine if Intuit fixed this issue (other software does not prevent e-file with safe harbor).
Does anyone know the status of this with turbotax? I can switch to another program if turbotax still has this limitation.
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@yelkenli First you may want to not take the safe harbor election so that you won't be subject to SE taxes on the sale of those assets in the future as they will be then subject to ordinary income.
I don't work for TT but, they believe that you have to have a signed declaration with your return and why you need to print and mail it and this continues in 2021.
Again, I do not agree that there is any reason to take it any longer now that the IRS has expanded section 179 and the bonus depreciation. You may want to rethink taking the deminimis safe harbor election. Talk to a tax advisor.
Hope this is helpful:
There are three federal income tax reasons why you should use 100 percent bonus depreciation instead of the de minimis safe harbor:
Then of course there is the option to section 179 treatment.
As long as your spending is at or below that limit of $2.62 million, your purchases will qualify. But the deduction begins to phase out dollar-for-dollar after that limit is met and will discontinue at the $3.67 million mark.
So, be mindful of that $2.62 million ceiling. If you’re getting close to it, consider postponing any additional purchases until 2022 so you don’t lose your eligibility.
To remove safe harbor elections:
First Change your assets answer. The program will not delete information it feels is important. You must have marked safe harbor as you were going through the rental. Return to the rental and uncheck that you are using the safe harbor method. Then you can delete the worksheet.
In TurboTax Online, delete by going to the left menu, Tax Tools. Select Tools and Delete a Form. Scroll to find Section 1.263(a)-1(f) De Minimis Safe Harbor Election and Delete Form.
If you are in TurboTax CD/Download, go to forms mode and double click Open Form. In the search box, type election, scroll down to select De Minimis Safe Harbor Election. When it opens, uncheck the box.
This election is made annually. To change it from year to year does not require Form 3115 Change of Accounting Method. Without it, capital assets $2,500 and less will be depreciated over their useful lives instead of expensed.
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